Three Essays in Labor Economics and the Economics of Aging

Essay I. The Wage Elasticity of Informal Care Supply: Evidence from The Health and Retirement Study. This paper analyzes the relationship between wages and the supply of informal care. Unlike most of the previous research estimating wage elasticities of informal care supply, this study recognizes that the wage rate may be measured with error or may be correlated with omitted variables and employs instrumental variables techniques to overcome these problems. Based on the data from the 1998 wave of the Health and Retirement Study, the results show that the wage elasticity of informal care supply is negative and larger in magnitude than has been found previously. Additional findings suggest that informal care supply is more elastic among individuals with siblings and that it differs by the type of care provided to elderly parents (help with basic personal needs vs. help with household chores, transportation, errands, etc.). Essay II. Economic Consequences of the Death of Elderly Parents (In Progress). The death of an elderly parent might have numerous effects on the financial well being of the households of the surviving adult children. On the one hand, there is a possibility of inheritance and/or cessation of a period of caregiving on the part of the surviving children. On the other hand, there may be significant impact of the grieving process on everyday activities that may be translated into economic losses. Economists have done very little to explore these effects. This paper will use 1992-2002 data from the Health and Retirement Study to produce a descriptive account of the financial impact on surviving children of the death of an elderly parent. This data will allow an examination of the time path of earnings and household income both for households that did experience the death of an elderly parent during the panel and for households that did not, an obvious comparison group. The relationship between the impact of the death and the circumstances surrounding the death (i.e. sudden death vs. death after long illness) will also be explored. The descriptive account of this paper will provide evidence that will allow both the formulation and the testing of hypotheses about the impact of the death of an elderly parent. Essay III. Minimum Wages in the Longer Run (with David Neumark). Exposure to minimum wages at young ages may lead to longer-run effects. Among the possible adverse longer-run effects are decreased labor market experience and accumulation of tenure, lower current labor supply because of lower wages, and diminished training and skill acquisition. Beneficial longer-run effects could arise if minimum wages increase skill acquisition, or if short-term wage increases are long-lasting.

Caregiving

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